Total cost for a small retirement plan dips

The average total plan cost for a small retirement plan declined from 1.46 percent to 1.44 percent of plan assets over the past year, but the total plan cost for a large retirement plan, over 1,000 participants, remained flat at 1.03 percent, according to the 14th Edition of the 401k Averages Book.

Small plans are those with 50 participants and $2.5 million in assets.

"In most of our fee benchmark scenarios we saw a decline in total plan costs and investment fees on a year-over-year basis," said David Huntley, co-author of the 401k Averages Book.

The study shows the small plan average investment expense went from 1.37 percent to 1.35 percent, while the large plan average investment expense bumped up from 1 percent to 1.01 percent.

"In cases where it stayed flat or ticked up, the increase in equity exposure in our allocation model was typically the reason," Huntley said.

"The effects of fee disclosure and competitive pricing narrowed the range of the middle 50 percent of the product universe for most of the benchmark universes," said Joseph Valletta, co-author of the 401k Averages Book. The small retirement plan universe saw the range of the middle 50 percent shrink from 36 basis points last year to 29 basis points this year, while the large plan variance went from 21 basis points to 20 basis points.

This year’s edition of the book includes a new set of benchmarks for small so-called micro plans, or those with 10 participants and assets of between $100,000 and $500,000. The report found that the average total plan expense for a 10-participant plan with $500,000 in assets was 1.90 percent.

Published since 1995, the 401k Averages Book is the only resource book available for non-biased, comparative 401(k) average cost information. It's designed to provide financial professionals and plan sponsors with essential 401(k) cost information needed to determine if their 401(k) plan costs are above or below average.